China plays down concerns of excess foreign debt amid US Federal Reserve monetary easing
- State Administration of Foreign Exchange spokeswoman Wang Chunying said that over the medium to long term, the foundations in the foreign exchange market for stable operations are still solid
- Lured by cheap credit in the wake of the 2008 global financial crisis, Chinese firms snapped up assets abroad, drawing the attention of China’s regulators
China has not accumulated excessive foreign debt amid US Federal Reserve monetary easing while expectations of one-way movements in the yuan have been avoided with more currency flexibility, the foreign exchange regulator said on Friday.
Wang Chunying, a spokeswoman for the State Administration of Foreign Exchange, said that over the medium to long term, the foundations in the foreign exchange market for stable operations are still solid.
“These are the bright spots that we are seeing, of course, we have also noticed some risks. For example, the surging global pandemic and geopolitical factors will have some impact on our external economy and international balances,” Wang said.
Lured by cheap credit in the wake of the 2008 global financial crisis when the US Federal Reserve launched quantitative easing to inject money into the economy, Chinese firms snapped up assets abroad, drawing the attention of China’s regulators.
Chinese conglomerate HNA Group was earlier this year placed under a bankruptcy and restructuring process due to its liquidity crisis which stemmed from years of aggressive acquisitions abroad.
The yuan briefly firmed to its strongest level against the US dollar in nearly six weeks on Thursday as the US dollar weakened.
China is expected to have a current account surplus in the first quarter, though it will be smaller than the fourth quarter last year, Wang added.